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Facts
Four appeals were filed by charitable trusts against the orders of the CIT(E) rejecting their applications for registration. The rejection was primarily due to non-submission of requisite documents within the stipulated time, attributed to administrative constraints and the failure of an earlier consultant.
Held
The Tribunal held that the rejection of applications was based solely on procedural grounds without examining the genuineness of the activities. Considering the delay was unintentional and due to bona fide reasons, and that the assessees had submitted financial statements, the Tribunal set aside the orders and restored the matters to the CIT(E) for fresh adjudication.
Key Issues
Whether the rejection of registration applications solely on procedural grounds, without examining the merits, is justified, especially when delay in submission is explained and supported by evidence.
Sections Cited
12A(1)(ac)(ii), 12A(1)(ac)(iii), 17A(2)
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Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: MS.SUCHITRA R. KAMBLE & SHRI MAKARAND V.MAHADEOKAR
2 together and are being disposed of by way of this consolidated order for convenience and judicial economy.
Brief Facts
The appellants are religious cum charitable trusts engaged in carrying out welfare, educational, cultural, and religious activities for the benefit of the community at large. Each appellant had filed applications before the Learned Commissioner of Income Tax (Exemptions), Ahmedabad, seeking registration under section 12A(1)(ac)(ii)/(iii) of the Income Tax Act, 1961, by submitting the prescribed Form 10AB along with supporting documents. During the processing of these applications, the Learned CIT(E) issued notices dated 20/08/2024 and 09/10/2024, requesting the appellants to submit certain requisite documents to substantiate the genuineness and charitable nature of their activities. Despite issuance of these notices, the appellants did not furnish the required documents within the stipulated time nor sought any adjournments or extensions. Consequently, the Learned CIT(E) passed orders dated 13/11/2024 rejecting the applications and cancelling provisional registrations on the grounds of non- compliance with Rule 17A(2) of the Income Tax Rules, 1962, and non-submission of documents.
Grounds of appeal – Common in all four appeals 3. Aggrieved by the orders of CIT(E), all the assessee preferred appeal before us raising following common grounds:
3 1. Learned CIT(Exemption) has erred in rejecting the application made under section12A(1)(ac)(ii) of the Income Tax Act, 1961in an arbitrary manner.
2. Learned CIT(Exemption) has erred in not providing sufficient opportunity for the appellant to explain and submit the documentary evidence.
The appellant craves leave to add, alter, vary, omit, amend, or delete the above grounds of appeal at any time before, or at the time of, hearing of the appeal, so as to enable the Hon'ble Income-tax Appellate Tribunal (Appeals) to decide this appeal according to law.
Condonation of delay
At the outset, it is noted that there is a delay of 63 days (as stated by the assessee delay is of 62 days) in filing each of the present appeals before us. The assessees have filed applications for condonation of delay along with affidavits sworn by the respective trustees, namely Shri Kasamali Takodi and Shri Nurmahammad Asamdi. It is stated in the affidavits that Form No. 36 for each appeal was filed on 04.04.2025. The delay, as explained therein, occurred due to two specific reasons: (i) the trustee did not regularly monitor the registered e-mail ID, which resulted in oversight of the communications issued by the Department, and (ii) the previous consultant engaged by the trusts failed to take timely action in the matter. It is further submitted that the issue came to light only in the year 2025, upon the appointment of a new consultant, whereafter the assessees immediately took steps to file the appeals without any further delay. The delay has been explained as unintentional and 4 arising out of bona fide circumstances beyond the control of the appellants. Considering the explanation offered and respectfully following the ratio of the Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji [(1987) 167 ITR 471 (SC)], wherein a liberal approach has been laid down for condoning procedural delays to advance substantial justice, we are satisfied that sufficient cause has been shown. The Departmental Representative (DR) has not raised any objection in condoning the delay. Accordingly, the delay in filing the appeals is condoned, and the appeals are admitted for adjudication.
During the course of hearing, the learned Authorised Representative (AR) appearing on behalf of the assessees contended that although notices were issued by the CIT(E), the same could not be effectively responded to due to administrative constraints and failure on the part of the earlier consultant engaged by the assessees. The AR submitted that the trusts are small religious cum charitable organizations dependent on voluntary contributions and do not have a dedicated tax compliance team. Due to non-monitoring of the registered e-mail ID and the previous consultant’s inaction, the opportunity granted by the CIT(E) could not be effectively availed. The AR reiterated that the assessees are engaged in genuine religious, educational, and charitable activities in accordance with their stated objects, and that the failure to submit documents before the CIT(E) was neither deliberate nor mala fide. He submitted that the assessees are now in a position to file all requisite documents and prayed that the matters be restored to the file of 5 the CIT(E) for fresh adjudication after affording a reasonable opportunity of hearing.
The DR relied on the orders of CIT(E) and submitted that sufficient opportunity was afforded to the appellants, but no compliance was made. However, the DR raised no objection to the request for restoration of the matters to the file of CIT(E) for fresh adjudication.
We have carefully considered the orders passed by the Learned CIT(E), as well as the submissions advanced by the AR of the assessees and the DR. On perusal of the orders impugned before us, it is evident that the rejection of registration applications was based solely on the ground that the assessees failed to submit the requisite documents as called for by the CIT(E), thereby allegedly not complying with the procedural requirements under the relevant rules. The orders do not reflect any examination of the substance of the assessee’s activities or an evaluation of the nature and purpose of the institutions seeking registration.
During the course of hearing before us, the assessees have placed on record explanations supported by affidavits from the trustees, citing administrative constraints and failure of the erstwhile consultant as the reasons for non-compliance. It is also not in dispute that, along with their applications, the assessees had submitted audited income and expenditure accounts and balance sheets for the preceding financial years. These documents, along with written submissions filed before us, outline the objects and activities of the respective trusts. Consolidated summary of the key financial details such as Income, Expenses, Bank Balance, Cash in Hand for each assessee and year, based on the provided financial statements is given below:
Sr. Name of FY Total Total Surplus / Bank Cash Assessee Income Expenses Deficit Balance in (Trust) (Rs.) (Rs.) (Rs.) (Rs.) Hand (Rs.) 1 Shia Jafari 2021– 35,871 33,030 2,841.00 33,209 5,743 Momin Jamat 22 (Surplus) Imamwada, Kakoshi
2022– 57,796 55,457 2,339.00 34,445 6,846 23 (Surplus) 2 Shia Jafari 2021– 28,803 26,620 2,183.00 33,271 3,171 Mominin Jamat, 22 (Surplus) Kakoshi
2022– 29,779 27,789 1,990.00 34,510 3,922 23 (Surplus) 3 Shia Jafari 2021– 2,29,540 1,47,127 82,413.00 7,79,484 745 Momin Jamat, 22 (Surplus) Meta
2022– 2,30,820 2,15,985 14,835.14 5,62,599 7,744 23 (Surplus) 2023– 1,96,450 1,84,656 11,794.00 5,44,553 3,663 24 (Surplus)
7 4 Shia Jafari 2021– 91,497 86,030 5,467.00 22,212 10,091 Momin Jamat 22 (Surplus) Masjid, Kakoshi
2022– 1,02,087 98,650 3,437.00 23,039 12,701 23 (Surplus)
However, it is noted that the CIT(E) has not recorded any finding on the genuineness or otherwise of the activities mentioned in the written submissions, nor has there been any effort to correlate such activities with the financial disclosures already available on record. The orders are silent on whether the materials already submitted were even taken into account before proceeding to reject the applications.
In view of the above, and having regard to the overall facts and circumstances, we are of the considered view that the assessees deserve an opportunity to present their case in full, including submission of any remaining documents that may be relevant for adjudication. A fresh examination of the applications is warranted in the interest of fairness, particularly keeping in view that the rejection was on procedural grounds without any comment on merits.
Accordingly, we deem it just and proper to set aside the impugned orders and restore the matters to the file of the CIT(E) for fresh adjudication in accordance with law, after affording reasonable opportunity of being heard to the assessees. The impugned orders passed by the Learned CIT(E) rejecting the applications for registration under section 12A(1)(ac)(ii)/(iii) of 8 the Act are hereby set aside. The matters are restored to the file of the CIT(E) with a direction to examine the applications afresh in accordance with law, after affording adequate opportunity of being heard to the assessees and taking into consideration all documents and submissions placed on record. The assessees are directed to fully cooperate with the proceedings before the CIT(E) and ensure timely compliance by furnishing all requisite documents, clarifications, and evidences as may be called for, without seeking unnecessary adjournments. Failure to do so may result in appropriate consequences under law.
In the result, all four appeals filed by the respective assessees are allowed for statistical purposes.
Order pronounced in the Court on 5th June, 2025 at Ahmedabad.